12/31/99: "Market Monitor"-Sir John Templeton, Founder, Templeton Investments
PAUL KANGAS: Tonight's market monitor guest, the last one of the century, is one of the most successful fund managers in history. At age 87, Sir John Templeton is no longer active in the management of the firm he started in 1954, Templeton Investments. Still his name is synonymous with success. Recently I sat down with Sir John and began by asking him what single development has had the great impact on the financial markets in this century.
SIR JOHN TEMPLETON, FOUNDER, TEMPLETON INVESTMENTS: Paul, all of humanity should be overwhelmingly grateful that we've been permitted to live in the most wonderful period of all world history. One of the things that's happened is the triumph of free competition. A century ago most nations were tightly controlled. Now most nations are free, and as a result new creativity, new concepts have come about, including in the financial area. Now there are at least ten times as many people who owners, owners of shares or owners of other assets than there were a century ago. So, the widespread common share ownership has been a tremendous benefit.
KANGAS: You have made the Templeton name synonymous with successful mutual fund investing for over 50 years. What has been the major factor or what had been the major factors in your success?
TEMPLETON: Probably concentration on service. Any career that you undertake you must not start out to make yourself rich. You start out to help your customer, to give them better quality, to give them lower cost, to help them to prosper. If you do that, then automatically more people come to you. Until one time before I sold out, we had a million people who were depending partly on us.
KANGAS: As we close this century Sir John, the individual investor is playing a very different role in the financial markets than at the beginning of the 1900's. Is this a good change or a bad change?
TEMPLETON: Oh, oh, it's very good, marvelous in fact. How important that millions of people rather than a few people are the owners. Not only does it make them wealthy from a prosperous standpoint, but it makes them participate, makes them creative, makes them feel that they are useful in the world economy. So, the spread of ownership, widespread share ownership has just been a tremendous benefit and I don't see any disadvantage.
KANGAS: Given the increasing popularity of and volatility for that matter of the Internet stocks and more recently anything having to do with China, most of which have yet no earnings and the prospects of little earnings. Is value investing as put forward by Graham and Dodd of any value any longer?
TEMPLETON: Oh yes it is Paul. If you think about it from a common sense standpoint, when you buy a share you buy a share in order to participate in the profits of that corporation, and especially in the dividends of that corporation. So, in recent years when people have concentrated only on the growth instead of the earning power of the dividends, they are in dangerous ground. I would go as far as to call it a bubble. Throughout world history there have been numerous times when the people became excessively optimistic. And now in particularly the Internet stocks, they're excessively optimistic. Now that doesn't mean that I'm wise enough to say when it will stop, but I will go on record saying this Internet enthusiasm does mean the creation of a wonderful newer industry. But the people who are paying today's prices for some of those stocks are going to be very disappointed. I would say maybe as high as a majority of the stocks that are now traded on the NASDAQ and the Internet field will go down to 1/10th what they are now.
KANGAS: Looking ahead to the year 2000 and beyond, what is the biggest challenge that you feel the financial markets face?
TEMPLETON: I'm optimistic. If you take a longer range viewpoint, I think there's a better than even chance that in the new century the Dow Jones Industrial Average, which is now 11,000, will go up above 1 million.
KANGAS: One million?
TEMPLETON: One million. Now that sounds over optimistic, but, if you study the history of it, the first time it went above 100 was just over a century ago. So, I'm saying that in the new century it's likely to go up at least as much and possibly more than the past century. So the long-term investor will be rewarded.
KANGAS: Sir John, tell us about your extensive charitable work done through The Templeton Foundations?
TEMPLETON: Yes, when I sold all of my businesses, when I became 80 years old, I'm now concentrating entirely on trying to help spiritual wealth, not spiritual wealth for myself, but spiritual wealth for all of humanity. So our Templeton Foundations donate for our charitable purposes about 30 million dollars a year. And my intention is that for every dollar I spend on myself, every year I plan to give away at least 10 dollars. And those things we are now spending the money on we don't ourselves, but we find brilliant people who have good ideas about how to help humanity and finance them.
KANGAS: Sir John, all of us at the NIGHTLY BUSINESS REPORT want to thank you for spending some time with us and we all wish you and yours the happiest of New Years.
TEMPLETON: Thank you. |
